QT Ends, Crypto Rallies! Will Trump Speech Boost BTC? | Crypto Town Hall

Summary

Podcast Summary: "QT Ends, Crypto Rallies! Will Trump Speech Boost BTC? | Crypto Town Hall"

The Wolf Of All Streets hosted by Scott Melker delves deep into the current state of the cryptocurrency market, exploring the impending end of Quantitative Tightening (QT), recent market rallies, and the potential impact of a forthcoming Trump speech on Bitcoin (BTC). In this episode, Melker engages with a panel of experts—Dave, Alex, Carlos, Zillion, Iago, and Robbie—to unpack these topics, discuss regulatory challenges, security concerns, and the future trajectory of digital assets.

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1. Economic Indicators and Quantitative Tightening (QT)

The episode opens with Dave highlighting recent developments in economic policies, particularly Federal Reserve Chair Jerome Powell's announcement regarding the early conclusion of QT.

• Dave [00:01]: "Powell says QT starts in April instead of May and we get a little rally and the market seems to be moving higher."

The panel discusses the implications of ending QT sooner than anticipated. Alex provides insights into Powell's stance on inflation, suggesting that Powell views current inflation as transitory and tied to tariffs, indicating no imminent rate cuts.

• Alex [01:02]: "He's trying very hard to temper inflation and call it more of a transitory temporary thing that's tied to tariffs."

Carlos adds that the business community's anticipatory actions, such as preemptive price hikes in expectation of tariffs, have contributed to ongoing inflationary pressures.

• Carlos [03:46]: "The business community is very anticipatory of things... they kept jacking their prices, workers kept demanding raises and it perpetuated out."

Dave echoes the sentiment, emphasizing that the end of QT could signal stability in the market, albeit with skepticism about Powell's "transitory" inflation claim.

• Dave [02:34]: "Will QT end sooner rather than later or be extended. And that's probably the biggest thing people were thinking about."

2. Potential Trump Speech Impact on Bitcoin

The conversation shifts to rumors circulating about former President Trump's upcoming speech and its potential effects on Bitcoin's performance.

• Dave [00:23]: "Rumors about what Trump is going to say... interesting times."

Alex counters the likelihood of significant policy shifts, noting that executive orders on tax changes would face substantial resistance and potential lawsuits.

• Alex [01:02]: "Changing tax code is probably something that's going to involve Congress, obviously."

Carlos is skeptical about Trump announcing favorable capital gains tax relief for Bitcoin via an executive order, arguing that such changes require legislative action.

• Carlos [05:43]: "I don't see that happening."

Zillion adds a cautionary perspective, sharing personal experiences with exchange security to highlight the risks inherent in crypto platforms.

• Zillion [14:00]: "Had the custody account with blockchain.com hacked... nothing was done until 12 hours later."

3. Regulatory Landscape and Taxation of Crypto

The panel delves into the complexities of regulating cryptocurrency, especially regarding taxation and the classification of digital assets.

• Dave [06:15]: "It's about issue guidance... spending bitcoin doesn't trigger a taxable event that they probably could do."

Alex emphasizes the challenges of balancing security and usability in crypto transactions, noting that traditional finance systems are also grappling with similar issues.

• Alex [16:32]: "Blockchain.com would have such a low level of response."

Carlos underscores the need for congressional intervention to establish clear regulations, advocating for tailored laws that address the unique nature of digital assets.

• Carlos [35:22]: "Congress needs to get off their ass and actually write new laws to it."

Robbie introduces the importance of differentiating between securities and non-securities within digital assets, advocating for common-sense regulations that reflect the diverse use cases of crypto.

• Robbie [37:12]: "My big hope is that there's a little bit more common sense coming into this."

4. Security and Custody in Crypto

Security remains a paramount concern, with panelists discussing the vulnerabilities of both centralized exchanges and self-custody solutions.

• Zillion [14:00]: "If you do something like signal the account and they don't freeze it for 12, 14, 24 hours."

Alex compares the security measures of traditional banks with crypto exchanges, arguing that while banks offer certain protections, they lag in implementing advanced security protocols like two-factor authentication via authenticators.

• Alex [16:48]: "Banks still will not allow two factor authentication with Google Authenticator... which is the absolute worst two factor authentication layer."

Carlos contrasts the responsibility models between banks and crypto exchanges, highlighting that banks are accountable for fraudulent transactions, whereas crypto platforms typically are not.

• Carlos [20:01]: "If someone gets in and sends money who wasn't you, the bank's got to put it back. So it's a completely different threat model."

5. Inheritance and Usability Challenges

The discussion transitions to the challenges of managing crypto assets in inheritance scenarios, a critical aspect for broader adoption.

• Dave [24:28]: "Survivorship... Coinbase, Gemini Kraken don't allow you to put a beneficiary on it. Well, that's a problem for a lot of people."

Carlos suggests Casa as a promising solution for crypto inheritance, providing robust self-custody options that address these concerns.

• Carlos [26:06]: "The best inheritance solution I've seen so far is Casa's team, which is self custody."

6. Market Structure and Future of Crypto

Dave critiques the current market structure, particularly within Decentralized Finance (DeFi), highlighting its immaturity compared to traditional finance systems.

• Dave [25:35]: "The entire defi trading experience... is the kind of thing that reminds me of 1990s level trading in the equity markets before NASDAQ market makers had to settle."

The panel discusses the necessity of regulatory clarity and the potential overhaul of existing frameworks like the Howey Test to better fit the digital asset landscape.

• Alex [32:14]: "I still maintain that we need to revisit the Howey test... it’s probably due for a refresh."

Robbie emphasizes the importance of pragmatic rules that differentiate between various types of digital assets, advocating for regulations that reflect their unique characteristics.

• Robbie [37:12]: "We need to just have more pragmatic rules for the mainstream."

Dave expresses optimism about the current administration's understanding of crypto issues, believing that thoughtful regulation is on the horizon.

• Dave [38:28]: "The people who are in power make sense... that's why you're seeing the positive reaction on it."

7. Conclusion and Future Outlook

As the episode wraps up, the panelists remain cautiously optimistic about the future of cryptocurrency, emphasizing the need for continued regulatory development and technological advancements to address existing challenges.

• Alex [44:28]: "For the people who understand the long game, it could not be better."

• Carlos [43:04]: "There's so a lot of work to get there, 100%."

Dave reiterates the importance of moving beyond legal ambiguities to establish a robust and secure market structure, confident that ongoing efforts will yield positive outcomes.

• Dave [40:53]: "A consistent method for trading digital assets that provides a base level of protection without going too far."

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Key Takeaways:

1. End of QT: The early conclusion of QT by the Federal Reserve may stabilize markets, although skepticism remains regarding the underlying inflation narrative tied to tariffs.

2. Trump's Potential Influence: While rumors suggest Trump may make favorable announcements for crypto, panelists largely doubt significant policy shifts without legislative backing.

3. Regulatory Clarity Needed: There's a pressing need for clear, pragmatic regulations tailored to the unique nature of digital assets, potentially requiring a revisit of foundational tests like the Howey Test.

4. Security Concerns Persist: Both centralized exchanges and self-custody solutions have vulnerabilities, necessitating improved security measures and user education.

5. Inheritance Solutions Are Crucial: Effective crypto inheritance frameworks are essential for mainstream adoption, with solutions like Casa showcasing promising approaches.

6. Market Structure Maturity: The crypto market, especially DeFi, remains immature compared to traditional finance, underscoring the need for regulatory and structural enhancements.

7. Optimism for Future Development: Despite challenges, there's optimism that regulatory bodies and the crypto community will collaboratively develop solutions that foster growth and stability.

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This episode of The Wolf Of All Streets provides a comprehensive analysis of the current cryptocurrency landscape, balancing optimism for future developments with a realistic assessment of ongoing challenges. Whether you're a seasoned investor or new to the crypto space, the insights shared offer valuable perspectives on navigating the evolving digital asset ecosystem.

Transcript

[Dave]

Well, good morning, everybody. Powell says QT starts in April instead of May and we get a little rally and the market seems to be moving higher. Again this morning on some rumors about what Trump is going to say. So life. Interesting times. Interesting times. How are people feeling this morning?

[Alex]

Morning, Dave, how are you?

[Dave]

Oh, I'm doing just dandy. Just had a, interesting conversation with Iago on bitcoin, which, you know, subbing for, for Scott on his channel. And yeah, he, he has, he has to be, you know, more bullish than I was beforehand, which is always a good thing. But yeah, what do you make of, of these rumors, which I still think are, are kind of crazy and I'm not sure that he even could do it about Trump announcing, you know, capital gains, you know, no capital gains taxes or capital gains relief for crypto or bitcoin or whatever.

[Alex]

I think just like everything else that's going on right now with respect to executive order season in some way, shape or form, it'll meet with resistance and potential lawsuits. Changing tax code is probably something that's going to involve Congress, obviously. So an executive order and the pattern of executive orders that I'm seeing coming out of the White House I think are more intended to set the tone for the agenda as opposed to actually getting constructive things done. I don't think it's a bad thing to see an agenda being pushed that puts crypto first and forward. So I'm excited about that. But when you have to get to the granular level of getting things done in Washington, you still have to go through the legislative branch because money and the purse is tied to the legislative branch. So interesting Powell's comments yesterday, also interesting. I think he is trying very hard to temper inflation and call it more of a transitory temporary thing that's tied to tariffs. His comments, and if you read into his comments suggest that he's not prepared to push any rate cuts at this moment, but is watching and overall doesn't see big indicators of an inflation concern. I mean, obviously we're seeing gas prices coming down. Risk assets responded nicely to it. And I think we just need to have a little patience, as always. Dave.

[Dave]

Yeah, I mean, my read is, was pretty straightforward. I said before what people are going to care about is will QT end sooner rather than later or be extended. And that's probably the biggest thing people were thinking about because I don't think anybody really, really expected a rate cut or announcements about rate cuts. And he said ending in April, which is sooner than, I guess the markets were 100% in May, but it wasn't clear. So, you know, that was sort of an all clear kind of thing. I kind of wonder in a way if he regrets his comment using the word transitory because I think from a legacy point of view, you know, it's associated with such obvious stupidity from the last time that it was used that I wonder if he regrets that. But I think that looking at truflation and looking at things going on, I mean, you know, it's to say that, that what inflation we have due to tariffs when they haven't really started yet, is interesting to say that inflation, that the tariffs that are going to start on, quote, National Liberation Day, which I find amusing, by the way, on April 2nd will be inflationary. I think that that's basically two plus two equal four math, right, Alex?

[Carlos]

Yeah, I mean, I think, you know, one thing we've definitely seen is like the business community is very anticipatory of things. And so, you know, this is one of the big challenges that the Biden admin had, I think, in getting inflation down is that what people believe is going to happen is what happens. And since people thought it was going to keep perpetuating, they kept jacking their prices, workers kept demanding raises and it perpetuated out. And so when you've got a business community, especially if you talk to anyone in, you know, construction or anyone who's using, you know, buying steel or other hard materials, they're all, you know, they're already announcing their price increases in expectation of the tariffs, which causes other people to be like, okay, well my input costs are going up and they start announcing their price increases and it just becomes kind of a perpetuating cycle on it. So I think how showing that he's going to be reactive to things, obviously, and they're keeping an eye on it. But I think learning the lessons from the past is very much what the market wanted to see from him, which is why you're seeing the positive reaction on it. Going back to what Carlos said about the capital gains thing on Bitcoin, I will, I will bet anyone a lot of sats that you're not getting no capital gains on bitcoin. You, you might get a meaningless executive order like we've seen many of, but at the end of the day, federal tax law has to go through Congress. And if you look at the budget like there is no way that the House and Senate Republicans are going to cut Medicare because they're going to have to cut Medicare under the current budget proposal. Cut Medicare to pay for A capital gains tax cut on bitcoin. I mean the amount that they would get thrashed for that is unbelievable. So don't see that happening.

[Dave]

Yeah, I completely agree. I also don't think it's a smart move. I think that what they could do, that would be a smart move. But of course, it's a question of degree is issue guidance that they, that spending bitcoin doesn't trigger a taxable event that they probably could do. But even there, it's one thing to say spending bitcoin for a cup of coffee isn't a taxable event, but if you spend bitcoin to buy a house, I doubt very seriously that they could do.

[Carlos]

Yeah, always degree. At the end of the day, bitcoin should probably just be treated as any other foreign currency is. And if you're trading foreign currencies, you're taking tax obligations as you cross.

[Dave]

Yeah. Although the number of people who pay taxes, if you happen to have, you know, I don't know how you would sell Turkish lira. I mean, basically the number of people who would actually pay capital gains taxes on currencies if you're not an actual trader are probably counted on one hand.

[Carlos]

Right. But that's also because it's de minimis. To your point about earlier with like the cup of coffee, it's because it's de minimis amounts of money.

[Dave]

Yeah, I mean, that's true. Although, I mean, look, there are commercial, commercial hedgers and commercial traders who probably, you know, it depends on how they do it. You know, it's, it's, it's really interesting. I mean, you know, I don't know the answer to these questions, but what I do know is that bitcoin is a different animal because unlike, you know, when you're buying or you're repatriating, you know, foreign currency because you've made sales, which generally is done contemporaneously with the sales sometimes hedged, you know, in advance and the hedging and almost is almost certainly taxable. Bitcoin can easily be spent. Right. You know, it's designed for it, so it does, it is different. And I just don't think there's any really good way for them to do anything without congressional action. That that's really the point, I think.

[Alex]

Do you suspect, Dave, that these announcements are going to come out today at the Blockworks Summit that's happening in New York?

[Dave]

I. Look, I personally doubt it, but the rumors are circulating on crypto Twitter, so make of that what you will. I mean, look, bitcoin if it holds these levels right now, I mean the technicians, some technicians are already capitulating but there's not a lot of positive momentum here. I mean this is still. Yeah, I mean it's, it held support and so, and all the dire predictions look to be, you know, not happening. But you know, we, we shall see. I mean we all know, you know, I predicted a bottom a couple weeks ago. So far I look smart. Markets have a way of making me feel like I'm stupid. I think anyone who trades should understands that. So it's really all about risk management. But we're still seeing, we're not seeing anything close to approaching greed yet. Right. So I don't, you know, I don't know how much hype is there, but there's all. People always hype this stuff.

[Alex]

I think we're still in chop season, Dave, and I agree with you. I think we're still going to see some chop as things continue to unravel and work themselves out. But the fact that he's slated to appear along with Saylor and speak today, obviously good news for the sector.

[Dave]

Yeah, I mean, look, I'm very public about the fact that the announcement of the strategic reserve and the singling out of bitcoin and in fact yesterday it didn't get reported very much. But the fact that someone in the administration, Beau Hines, call bitcoin digital gold and they view it that way and we want to. Basically he sounds like me in terms of how much that bitcoin is dramatically undervalued. Right. That's the kind of thing that gets investment advisors attention. That's the kind of thing that will probably start moving the needle with investment consultants. That's the kind of thing that funds that have discretion over what they're investing in will care about and it does matter right now. Yeah, There are certainly funds out there who our anti Trumpers will say, oh my God, we want to do the opposite. But honestly, when money is on the line, I think most people tend to check their politics at the door, which would be a wise, wise thing. Alex. Yes. Yeah.

[Iago]

Hey, Dave. Really enjoying the discussion.

[Dave]

I got a couple of quick things.

[Iago]

One, if I had to guess what Trump will say today, I would go with sort of a non announcement related to the presidential working group. March 24, they have the second round of things they have to deliver to the PWG. So the first 30 days was a catalog of all the issues that various agencies have related to digital assets. And then 30 days after that, which is March 24, is a series of recommendations of how they would alter them. And my guess and a rumor I'm hearing is that he'll say something like, you know, he'll announce some of the recommendations early. Right? Or he'll say like, you know, as I promised, my government has delivered XYZ amount of, you know, recommendations to improve crypto in America. That's my guess is what he'll say. I like Bo Hinds.

[Carlos]

I would, I would take what Bo.

[Iago]

Says is a little bit of a grain of salt.

[Carlos]

He's.

[Iago]

He's sort of a political spokesperson at most and the junior wanted that. So just generally speaking, like what Bo says, whether he said at the BPI roundtable that we want to acquire as much bitcoin as possible, like possible. Doing a lot of heavy lifting there in that sentence. And he's kind of just vibe talking. Pretty sure he's not really like that important of a spokesperson.

[Alex]

Let me just throw that out there.

[Dave]

Yeah, that certainly makes sense to me. The real question for investors is in the crypto world, so many people have gotten burned serially every time there's a hype cycle and levered up and then got liquidated. The question is, is that over now? Is it a long term vers. This is short term thing, you know, has the market shaken out? I'm curious anyone who thinks that this is different with than Carlo, what he thinks because I tend to agree with Carlo. I think we're still in flop and chop season. I just don't think that the technical damage was nearly as bad as people believe. And I do think that the fundamentals will matter. But right now, not much zillion. What do you think?

[Zillion]

Yeah, I think that the price movements like you always say they're made by people making prices. So I think that obviously in our environment there is still a lot of predatorial behavior and there is still a lot of service providers and participants that don't live up yet to the promise. This is very important. I think maybe they don't see what's in it in them for the. I don't understand why they don't basically level up because we are going somewhere and I think that the fact that you have a US President that is talking about the asset class at this level, you have a bunch of, you have an organizational setup that is made to advance the crypto agenda, etc. Is very important. And I think this is how this asset class will move forward. My last experience today, I'm just speaking about this. If anyone can, can, can, can, can have an idea how How I can do it. But just today I had the custody account with blockchain.com that was there for like two, three years. I haven't touched it and today it got, it got hacked and assets withdrawal and I, I asked specifically the support yesterday when I noticed to freeze my account and nothing was done until 12 hours later where assets were withdrawn. You understand? So there is, there is a level that, there is a level of service level that, that these certain providers, obviously not the top providers because top providers are the top because they offer a certain level of service. But at a certain point we're talking here about financial assets, right? We're talking here about people's money and people's savings. For me it's not given my over in the overall picture it's not a huge deal but it's still a significant amount of money that live because the customer care is not syncing with the. They don't have emergency procedure or God knows what they have in their operation. And these entities, these same entities, they show up in conferences and they say we are the most secure environment. No they're not. I just paid the price. So anyways, bottom line, I think that, sorry, from an agenda perspective and from a pathway perspective, I think we're making significant progress right now still from a price discovery perspective, we still have stuff to do. You still have an imp. You're gonna have a large improvement of the environment from the service level that these providers offer to their customers. You still have long ways to go. But yeah, we're in the right path and this is very exciting fundamentally.

[Dave]

I mean when I hear that, you know, and by the way, I'm sorry to hear that, but you know, when I hear stories like this and we do all the time at the same time. Last week was it Kevin O'Leary going on national television talking about how it's safer to hold your bitcoin on centralized exchanges. And you know, I find it bewildering. You know, it's one of those things where I can understand if it's insured, but the average human being, the average investor in America is so used and conditioned to. Then people probably, if you ask most, they wouldn't even know what SIPIC is. They just know if they have stock in a brokerage account that it's there. Nothing is going to happen to it.

[Zillion]

Exactly. I mean look, can you imagine like you signal to the actual help desk and you tell them look, please freeze the account. And they send you like a generic email saying please check this, please check that, no, freeze the account and then we'll talk later. Right? Because. And these are such simple procedures. But you. At. At. I mean, if you, if you, if you do, if you, when this stuff happens to you personally, you're like, oh, my God, how can I trust this organization? How can any regulator not check? Because these, these guys, they claim to be regulated. They claim to do a lot of things, so. To be secure. Anyways, I mean, I'm baffled, to be frank with you, because I would never have thought that blockchain.com would have such a low level of response.

[Dave]

It's.

[Zillion]

It's crazy. I mean, you know, you signal the account and they don't freeze it for 12, 14, 24 hours.

[Dave]

Yeah, it was crazy. It would be great to get someone from blockchain.com on here, but I suspect they're going to want some more research before it. Carlos.

[Zillion]

Yes, please.

[Alex]

Yeah, look, first of all, I feel your pain. I'm sorry that that happened to you. But if you look at it from both sides, traditional finance is still so far behind the curve when it comes to security measures, even in comparison to Coinbase. I would venture to say that Coinbase is a more secure platform to store your assets on than a bank or a traditional finance house, because banks still will not allow two factor authentication with Google Authenticator and require you to use your cell phone or your email address, which anyone in this space knows is the absolute worst two factor authentication layer. And it's the same for most traditional investment funds that you store or custody your money with. So there's still a lag in traditional finance in catching up to exploits, and it's only natural that we're going to see it in crypto as well. But your money is just as vulnerable in a bank in, in certain aspects, or in Vanguard for that matter, because they are really still behind the curve in, in creating proper security measures to protect against which, let's be real, the biggest vulnerability is still human error and people falling for and getting scammed with fake verification codes and so forth, getting texted to them.

[Dave]

So that's.

[Carlos]

That's not really right. Number one, it depends on the bank that you're using. What? Frankly, I'm annoyed that Chase does it that way, but that's just because I want the convenience of using pass keys rather than a text code thing. But you're also kind of comparing apples to oranges there. Banks are looking at different threat models that they're countering against too. Unlike with Coinbase, banks are responsible if you get scammed and send the money you're responsible for it. If the bank's security procedures get breached and someone gets in and sends money who wasn't you, the bank's got to put it back. So it's a completely different threat model there versus if someone gets into your Coinbase account and sets and sends it, even if a breach really set like you, that's your problem and the crypto's gone. So the, and I think that by the way that that's something that people like. Like they like knowing that it is not their problem if like or that the money will get put back if there is fraud again as opposed to a scam where you choose to send it like that's a thing that people like. And so the, they don't really care that there's not, you know, task key based authentication versus SMS based authentication, the bank still ultimately have a better user experience for most people. And then that doesn't get into the additional lay after that. Again this is one of the things that gets annoying for those of us who are more sophisticated. But like man, there are days where I'm trying to send like large wires from Chase and just like can't because you know, their security teams are actually reviewing their and their algos are actually reviewing every transaction and stopping them and not sending them. Unless you then go through additional layers of verification and then you carry that.

[Alex]

To self custody too then Alex, self custody invites its own sets of risks because at least with some of these more reliable, more I think robust centralized exchanges, at least they have, they have people watching this stuff. Whereas we just saw the recent Chrome exploit. Anyone with Metamask, anyone working off of the Chrome browser could potentially be exploited even if you're self custodying. So it's a never ending challenge.

[Carlos]

And I mean one of the interesting things with self custody too is like you're actually because if you're going to use something that's really secure, which is basically protocol level multisigs, you're actually limited in the controls, right? If I want something where I can say hey, I want, you know, let anyone who's authorized send $10,000 out of this account, right. But require two people to sign off if it's up to a million and three people if it's above a million, right. Ironically, the only way I can do that is with centralized third party custodians who've built their own software layer on top of it. I can't do that using native protocol. Right? Native protocol. I can pretty much only do either. You know, you need a multi Sig for everything. So even if I just want to send a $1 test transaction, it stole like three signatures. And again, one of the things we're going to have to do is we're going to have to make it less nerve wracking to do this. Like I regularly have had to do seven, eight, even occasional, the occasional like nine figure crypto send. There is no way currently to not make that an absolutely fucking nerve wracking, nauseating experience. I don't care how many test transactions you do, I don't care how many people are on the multisig. Signing a phone transaction that you know is completely irreversible to send, you know, 10, 20, $30 million somewhere is absolutely nerve wracking. Anyone who does them will tell you this. And you know, that's when we're talking about like the huge controls. I don't know how we expect people to send significant chunks of like their personal net worth. Right? Because $10 million to a company is the same as a thousand or ten thousand dollars to the average person. Sometimes I don't know how we expect people to do that without really evolving it or giving people really good solutions where they feel like they have a fallback and a response. And like that's why. Again, this goes back to why people like banks at the end of the day, they may hate the banking system in the abstract, but they like their bank because they feel protected by it.

[Zillion]

And at least when someone, the account holder calls you and say freeze you freeze. What?

[Dave]

What?

[Zillion]

What is this?

[Dave]

Yeah, yeah. Well, I mean look, anyone who's ever done it is crazy. But I do want to point out a couple things that are fascinating. One is today anyone who sends a Zell now cells are generally thousands, not millions of dollars. I don't know anyone's allowed to do that. But you know it tells you right when you're pushing the button. Are you sure? Once you do this it's irrevocable. The money is lost. So understand. And that's actually within the same rails which I find fascinating. The second that point is post in a post stablecoin world where banks are using stablecoins as their rails, expect more to be like Zelle and less to be and be less like what it currently is because with that speed will become an irrevocability which means that banks need to come up the food chain in terms of security rather quickly in that world. Which by the way is another reason why they're less enthusiastic about it than the rest of the world world. So it is worth understanding that that is coming. And it does matter. I mean, Carlo, I see you giving the heart. I assume you agree with that.

[Alex]

Yeah, look, we all have felt the creeping dread of having to move things off of centralized exchanges to do the responsible thing and put them in self custody. And like Alex said, it's always, you know, you do your test transaction, then you second guess, you double check the address before you make the big transfer and you just hold your breath. And with Bitcoin, that takes a long time to reconcile. It's terrifying. It's not a fun experience. That's why this is still not for everybody in the way it currently runs.

[Dave]

Yeah, I agree. It's why I have, you know, personally multiple self custody wallets and multiple exchanges. You know, it's the same thing. You know, and look, there are some other problems that we talk about this, but these are all going to get solved. There are problems, right, like survivorship. So you're doing a will or if you don't do a will, you know, right now, if it's, if you have a brokerage account, you put a beneficiary on it to. By my knowledge, unless they've changed it in the last month, Coinbase, Gemini Kraken don't allow you to put a beneficiary on it. Well, that's a problem for a lot of people. So, you know, there's all sorts of small intermediation that people are going to want that will happen. I, I personally think there are people looking to solve that problem right now. If I had to guess, I haven't talked with Mike Belshi about it, but I'm sure that between Anchorage and Bitcoin and other custodians, they're looking at these sorts of problems in ways of solving them. You know, it's only been a month or two since the regulators would even let them even attempt to. So, you know, I guess we'll see.

[Carlos]

If you want to solve.

[Alex]

Oh, sorry, Alex.

[Carlos]

I was just gonna say real quick, if you want. Ironically, the best inheritance solution I've seen so far is Casa's team, which is self custody. With it, they have a really good inherited setup for people and that's in talk, in talking to, you know, technology, but not crypto oriented friends. That's one of the biggest things that keeps them from buying in is like what happens if I get hit by a bus and where does all that, you know, how do I know that like my spouse or kids or whatever actually going to be able to get in?

[Alex]

Then you layer on top of that, the concerns about the actual exploits that can happen when you're swapping, like mav attacks and sandwich attacks. And how do you explain adjusting your slippage and protecting against someone who is using sophisticated algorithms to track when you're moving a massive amount of coins from one to the other and how they can get in there, exploit and completely wreck your transfer? I mean, there are so many challenges still unanswered.

[Dave]

Well, I mean, you're talking my language now. I mean, one of the things that I always think about with crypto is how immature the market structure is. And it really is a rabbit hole. But the entire defi trading experience, as opposed to the defi yield experience, the defi yield experience is significantly more advanced. The defi trading experience, for most people it is crap. It's the kind of thing that reminds me of 1990s level trading in the equity markets before NASDAQ market makers had to settle. At the time was a landbreaking, a groundbreaking billion dollar settlement with the authorities for screwing around with their markets. And what they did is child's play compared to what happens in the in the defi world. Yet people in defi don't care for a variety of reasons. Most notably in all likelihood are what they view as less oversight. You know, it could be for anonymity, it could be for people who are dumb, tax avoidance, it could be for people who are dumber, regulatory avoidance by using, you know, by, you know, being able to do stuff, or people who just want freedom from the government. But the fact is the defi trading experience is God awful for that exact reason in many cases. I mean, you know, the very nature of MEV would be it makes what, what Michael Lewis talked about in Flash Boys in terms of front running once again look like child's play, you know, dramatically larger numbers. So, you know, there's a lot of things that are going to happen, but please, everyone should understand that, you know, there are people out there who, look, if you're buying a meme coin, you expect to a thousand X. Do you really care that you lose 1 or 2%? You know, future loss 1 or 2% when you're buying Amazon stock? You know, you, you would be screaming. I mean hell, people get mad about losing a hundredth of a percent or a thousandth of a percent in the equity market. So it is a very different world. Okay, so other than that, anybody else have any thoughts? I mean, the same, A lot of our people, a lot of people who are normally here are probably at das waiting. Does anyone know when the actual speech is going to be. I mean, I think it was recorded, but I think they're going to play it. It's. It's soon. Right.

[Alex]

If we can nerd out for a minute. I'm really excited about tomorrow's SEC Summit, and that's going to be broadcast live. And I'm excited to hear what's going to be discussed there, because I think that's going to lay tracks, Dave, for some clarity on how we can move forward when it comes to digital assets.

[Dave]

Yeah, I mean, I'm very interested in that, too. I was trying to think of if there was a way I could get myself invited because I understand a lot of these issues. The biggest thing that's going on with that working group is there's a. There's. There are things they want to do that they don't have the jurisdiction to do. And it's funny because unlike the previous administration, where when they didn't have the jurisdiction, they just claimed it, that's just not in the DNA of either Commissioner Purse or UIEDA or the working group. They're looking to see what can be done to create sandboxes, to create environments for entrepreneurs to feel free to. Actually, I don't want to say come in and register, but come in and talk and understand is interesting. The most important question I would love to hear answered, and I know it won't be, is, okay, you have this asset which is a security, because we think it has to do with a corporate entity, an asset which is not a security. We want to trade them on the same platform. How do we do it? What do you think?

[Alex]

Can you repeat the question, Dave? I'm sorry, I got distracted.

[Dave]

Yeah. The real question that we have as an industry is for years we've said being a security is a debt sentence because the laws just don't work. Well, this SEC gets that. I've talked to members of the, of the task force, so I know they get that they don't want it to be, but that doesn't answer the fact that let's say you're trading Bitcoin. You want to do a transaction to swap bitcoin for some token that may be deemed a security because it's controlled by a. It's control. The efforts of a central corporation are relevant, or maybe even it's for a future revenue stream, things that coins haven't. People in the US have shied away from that sort of thing. Or even a stablecoin, which might not be considered a security. You know, actually facilitating individual transactions. That involve securities and non securities is something that has to get tackled before it all works. Don't you agree? Yeah, no.

[Alex]

And I think we're starting to see it. I've seen several smart lawyers in the space beginning to write proposals arguing why things are not securities. Arguments that in the prior administration and regime would have been unthinkable to advance. Now we're seeing more robust creativity and conversation about, hey, this is not a security, and here's why. So I think the season now is going to be understanding that there are certain hard and fast rules that cannot be escaped, but having more of a dialogue about exceptions to these rules. And I think it's going to be exception season if I had to predict.

[Dave]

Yeah, I just don't think that does what we needed to do. I mean, for digital asset, for, for the asset markets to go digital, there needs to be, there needs to be changes to rules or exceptions. And I think you're probably right, it will start with no action relief. But I don't know how much can happen without Congress setting clear jurisdictional boundaries. And obviously I think there's big hope for a market structure bill. But realistically, the CFTC and SEC need to work together or it won't work.

[Alex]

I still maintain that we need to revisit the Howey test. And I think, you know, unfortunately, the downside, and I say this with a big caveat, the downside of these cases all getting dismissed is there's nothing on, there's nothing teed up to challenge whether Howie is the appropriate test, whether it's an outdated test, and whether the Supreme Court needs to revisit it. We had several cases in the pipeline that were teed up to challenge that. If they got that far, I'm relieved that they're not going that far. But also part of me thinks that aspect needs to be revisited as well, because we've always accepted this notion from the SEC that the Howey test applies to digital assets and whether they're a security or not and whether they're an investment contract. And we've pushed back against that, but lower courts are bound by precedent. So until we get clarity from the Supreme Court on that, we're still kind of stuck in that quandary where anytime you do challenge whether a digital asset is an investment contract or not, you've got to go through the tedious Howie analysis, which I think is somewhat outdated and probably is due for a, for a refresh.

[Dave]

Yeah, I mean, I agree, except I think that we're asking the wrong question and I will Always say it this way, that is so you know, Robbie's on the panel or. Yeah. And you guys, you're invested in a ton of businesses and I would phrase, I would love. I hope you can. You're available to speak but I'd love to have your answer to this question. I just don't think it makes sense, any sense for a company who's deciding how to raise capital to have to worry about the asset that they're creating, whether or not it's considered a security or not. If you're, if you are trading, you know, every bond or basically everything in the capital stack of corporations is considered a security. They have different methods of trading. But if, let's say for the sake and look at microstrategy or strategy as an example, you know, they have perpetual multiple asset classes. So now let's say you want to sell future revenues in the form of a token that's in an ecosystem alongside equity. Should you really be deciding, should those things trade differently? Just as a, as a first principle. And my answer is no, they should trade the same. But of course we have embedded problems in equities such as the accredited investor rule, which is really the thing that needs to go. Those sorts of rules need to go because one of the reasons people use crypto is to get around the accredited investor rule, which is insane. I mean if the rule itself is insane. Anybody have an opinion on that? I mean, Alec, your hand is up.

[Carlos]

All right. I think there's a lot of kind of crazy rules and then extend. Well, I think the idea though that like this isn't really a thing for the SEC or the courts to do. Right. Like when it comes to. Is Howie outdated? Like yes and no. I don't have that big a problem with Howie. I think like it is a good fundamental test when it comes to. Or good enough, I should say fundamental test when it comes to securities. I think the issue is that digital assets and things really don't fit into the traditional box well but the answer to that, the only answer to that is cool. Congress needs to get off their ass and actually write new laws to it. And like look, if someone good and they SEC like you Ata and purse, who I love want to like propose a thing which is exactly what you know, well under, you know, expert agencies and things should be doing is saying hey, here's a good proposal we can work off of. And there's obviously some things out there but like fundamentally the. You need a baseline catch all test when you don't know what's Coming down and right. When you're dealing with finance and people trying to do things like you need a good baseline test like how we did do it. It's just that when you find specific cases where it's not going to work, you then need to come with different paths, different ways to define things. But the only way to do that is in the law, which means Congress actually having to do it.

[Zillion]

Yeah, I just want to jump on this one because this is, I thought the path that David Sacks was taken. Right. Is taken basically a path of complete clarity via the law. So entrepreneurs should not worry about this type of stuff. Is that correct?

[Dave]

That is what he wants to do. But that's why. But it's not trivial to do it.

[Robbie]

I think also that's why I was quite optimistic when I saw Brian Quintess being sort of reappointed back to cftc. Because I think if we can really differentiate between things that are securities and not securities and add a little bit more common sense in there. Coming at it from. We have a background in video games and so when we came to blockchain originally it was to create tokenized in game content back in 2017. And the idea that just because something has more liquidity it should be considered a security even though it's just a collectible piece of IP in a video game is kind of absurd because nobody ever decided that Beanie Babies and Pokemons were securities. And the same thing applies for traditional in game currencies like gold in world of Warcraft, etc. And we've, we've used these examples quite a lot. So I think my, my big hope is that there's a little bit more common sense coming into this because obviously, you know, there will be bad actors, there will people who will try to wash trade with Beanie Babies, you know, this stuff happens. But by and large we need to just have more pragmatic rules for the mainstream, I think.

[Dave]

Well, I certainly agree with that. I think that a baseline principle based rule set which coast targets fraud and anti manipulation for all electronically traded assets is something that contends Paul Atkins and will almost certainly agree upon. I mean anyone who has my background and believe me, I understand liquidity arbitrage and I hate to admit it at various times in my career going back decades, thankfully, but you know, regulatory arbitrage, those are things you don't want. You don't want rules where people do things that have nothing to do with the economic reasons but have to do because there are different legal paths. And lawyers, of course they Love that because they get to create those different legal paths. And you know, sorry Carlo, but it's a fact and I have lots of friends who are lawyers who are expert in doing things such as structuring derivatives to get around tax laws in a particular way, etc. Etc. In this. My contention is simple, Robbie. It's that we want a consistent method for trading digital assets that provides a base level of protection without going too far. And I would defy anybody. And I mean I literally, I know them all or most of them the market structure quote experts in the equity markets in the US to say that if they had a blank sheet of paper they would design the market structure with currently have. I literally know, completely agree and so to me that's a big deal. Now the reason I am so supportive of this administration isn't because and so and I've been called fanboys and other sort of things is that the people who are in power make sense. I mean Scott Besants, if you've seen any of his recent tour on the, on macro makes enormous sense to me. In fact, the first one, the first secretary of the Treasury I think we've had in a very long time to actually understand, you know, the, the problem, frame the problem and, and also try to frame the solutions. Right? Same thing with David Sachs in terms of understanding the issues and getting there. To me that's the important thing. You know, people always say, I've heard you say it Carlo, people is policy. Right. I mean to me that's why I'm so hopeful. But there's a lot of work to get there, 100%.

[Alex]

There's definitely a lot of work to get there but conditions have never been better to get there. And I mean you could not ask for a more favorable environment for undoing what's been done and you know, forging a path forward. And I'm excited and as far as I'm concerned, I have pretty much from my own internal clock proclaim this a bull market. And I'm excited to start talking to builders again about building things. And I think the enthusiasm is starting to come back to the sector. So I'm really excited to start talking about not being afraid of doing things, but doing things again. And yes, we still need clarity but nevertheless I'm still very bullish on what's coming coming. Absolutely.

[Zillion]

I'll jump on this very quickly. I think that a lot of entrepreneurs have been very scared to do things like the very good ones and the risk averse guys and the guys that have opportunity cost they don't want to jump into this. This is very problematic for them. First of all, you have regulatory issues once you launch whatever you launch to finance your gig with. Second, you can't pivot because once you launch, whatever you launch, you have a community behind you and you can't pivot to find product market fit. So that's another issue. Third, you can't go bankrupt. Can you imagine a country where you can. What happens to countries where you can't go bankrupt, where you can't orderly dissolve your crypto enterprise? You cannot do that in the crypto space. So a lot of very good builders are saying, I'd rather build something else in Web2 what I have. Because you build it offshore or. Yeah. Or just come here to Dubai and structure it very well, etc. And, and you're welcome. Actually, if you want to come in Dubai, please do. That's, that's. Thank you guys. Thank you for having me. I have to address this issue of the hack. If anyone please know [e-mail] will be really great to get in touch. I'm just trying to get in touch with someone I'm unable to. And thank you, Dave, again for having me.

[Dave]

Yeah, thanks for taking the time. Zillion and good luck and Godspeed. Yeah, I mean it is completely fascinating, you know, from my perspective is interesting because, you know, I co founded a company that has effectively started in the US and I wouldn't say moved to Dubai, but we're half in Dubai now and. And you see the difference. And understanding that that could be here is something that I don't think the market is remotely pricing it. I think there are probably some of the biggest winners don't exist yet, or maybe not don't even have tokens yet. Or if they do, we don't know who they are. But understanding that sea change is a very big deal, you know, in terms of bitcoin, I mean. Yeah. I mean, I don't know. Is Trump speaking because the market looks like it just dropped 1,000 bucks. You know, I don't know. It's, it's. I don't know if people are on top of it. I haven't seen anything. But yeah, I think it's a very, very big deal.

[Alex]

There's a lag, Dave. There's always a lag. People were very impatient. We saw the enthusiasm post inauguration executive orders came out. But then everyone gets disappointed because they don't see immediate pumping of their bags and they get angry and frustrated and they don't realize that when it comes to making the sausage, it takes time for all these regulatory changes to work themselves out and get integrated into the system and people become impatient. Crypto is already an impatient, you know, adrenaline FOMO driven space to begin with. But for the people understand the long game, it could not be better. I mean, you really could not have scripted a better situation right now when you've actually got a crypto czar in the White House.

[Dave]

You know, obviously, I agree. I don't think we have, you know, it's, I constantly make the joke, you know, on our macro Monday, you know, that things are not priced in, but markets in the short run don't react to the, you know, they react to liquidity. And that's really, that's really what it is. And momentum. And you know, we have, we have a very fast news cycle that people are caring. I mean, and so we get overreactions and under reactions. If you take a step back and zoom out, you end up with a very, very different scenario. Like, you know, altcoins. People look at altcoins and they view it as a monolith. Well, it's not there. There are, there are building communities that are very, very different and there are very, very different use cases and very, very different things. That's why people like Robbie have jobs. Right. You know, you, you, you figure out what builders make sense. And in crypto we've kind of gotten away from that in technical trading because, you know, these things are so highly correlated. Well, why are they highly correlated? They're highly correlated because they're all reacting to these sort of macro factors, both liquidity and regulatory. It is highly likely that within the next several years that liquidity will always be there, but that you will start to see real builders start to emerge. You know, if you were paying attention back in 2003 and you were able to get money allocated into Google when people were saying, hey, yeah, we're using this thing, but it wasn't public yet. You did extraordinarily well. Right. I, I don't know what chains are going to matter and I don't know where the adoption will come from. I have suspicions, but I'm not going to, you know, talk about that now. But there's just a lot going on here. And you're right, Carlo, it's just a very, very big difference. But I will be, I've said it before, I'll be really happy when lawyers don't have to talk about the Howie test. And we just know that these assets are going to be traded on these platforms and here's how they're going to work. Here's what the disclosures are going to be for issuers. Here's how we understand, oh, here's what gets, what gets prosecuted and what doesn't. Right. But you know, it's, it's, it I'm struggling here because there's just so such a big divide. Right. You know, that's the other really big, big divide in the, in the industry. But anyway, seems like with DAs going on and what's going on in the market, we just, we have much less than usual. It's after 11 o'clock so if anybody has anything else to say, please let me know or we will call it for today and come back. Let's see, is there anyone down here? No, we'll call it for today and we will see tomorrow we'll actually be able to discuss what was said in terms of instead of speculating about what was said or what will be said. So see you back here tomorrow at 10:15 for Crypto Town Hall.

[Iago]

Thanks.